The Working Income Tax Benefit

The Working Income Tax Benefit (WITB) was introduced by the Federal government in their March 2007 budget. Its intention is to help Canadians on social assistance to get back to work by providing a financial incentive. You might think having a steady pay cheque should be incentive enough. Sadly, this is not always true since returning to work can mean a loss of valuable benefits like subsidized housing and prescription drugs.

The WITB is calculated at 20 percent of earnings over $3,000. The maximum benefit is $500 for single taxpayers with no children and $1,000 for couples and single-parent families. Disabled taxpayers are eligible for an additional sum. The amount of the WITB will reduce your tax payable and any remaining amount will be included in your income tax refund for the year.

To qualify, you (and your spouse) must be residents of Canada for the entire year and neither you nor your spouse can be a student for more than 13 weeks of the year. To benefit from having a child under the WITB, you or your spouse, must be the primary caregiver.

To claim the Working Income Tax Benefit, complete Schedule 6 when you prepare your tax return. If you are using a tax program, such as UFile.ca, you will find the WITB schedule is produced automatically if you are eligible and the benefit is entered on the family member who can use it best to reduce taxes owing.

Tax tip

If you had an eligible spouse on December 31, 2007, the one with the higher working income should claim the basic WITB.

If you had an eligible spouse on December 31, 2007, and one of you qualified for the disability amount and has sufficient working income, that person should claim both the basic WITB and the WITB disability supplement regardless of who has the higher working income.

If you had an eligible spouse on December 31, 2007, and both of you qualified for the disability amount and have sufficient working income, the one with the higher working income should claim the basic WITB. However, each of you must claim the WITB disability supplement on a separate Schedule 6.